Bulldoze: The New Way To Foreclose (via Time Magazine)

Let me try and understand this. The banking industry seized these homes, these precious homes, often the most valuable single thing that a family had, and having seized the home and cast away the occupants like so much chaff, they bulldoze it?

The banks do the deals because once the properties are donated they no longer have to pay taxes or for upkeep. Tax experts say the banks may also be able to get a write off for the donation. That appears to be a better deal than trying to repair some of these homes, which according to a BofA spokesperson are more economical to demolish than fix up. The local governments like these deals because they get free land to develop or use for open space. Cleveland-based Cuyahoga County Land Reuntilization Corp., which inked the deal with BofA, has been one of the most aggressive local government organizations in striking these deals. Housing economists like these deals because they remove homes from the market that would otherwise sell for a low price or not at all, dragging down home prices in general. An oversupply of homes on the market has been once of the big problems plaguing real estate. At the end of June, it would take nine and a half months for the current number of homes on the market to sell. The housing market is considered healthy when supply equals six months of sales. So taking some of these homes off the market for good could remove some of the inventory drag.

Thank God, Time Magazine is on the story. They’ll give these banks a talking to. They’ll call down the righteous ire of the oppressed down upon these home destroyers. But wait … !!! –

The question is whether the banks will ever put up enough housing for demolition to make a difference. The Obama administration says it is working on its own plan to revamp its loan modification program in order to help keep more people in foreclosure in their homes, reducing the number of foreclosed properties on the market. Some areas of the country are looking at how to speed up foreclosures in an effort to return some normality to the market. It’s not clear that any of this will work. Certainly, the idea that we are at the point where banks would be better off knocking down houses that reselling them shows there is still something very wrong with the housing market. But what is clear is that banks and others are at the point where they are ready to try something new to boost the housing market. And that is a good sign for the future.

This is the wisdom of the beltway, a never never land generally located near Washington but often and more simply a state of mind. In the beltway, the concerns of people for jobs, homes and economic security are the cries of the weak and whiny. Really important people are concerned about “who is winning” in Washington. Really important people constantly read articles about where it’s most profitable to live, where the taxes are lowest and where to invest their money. Really important people sit up and take notice of every move on the stock market and if a man has made a fortune his lack of gentlemanly qualities, overt greed, and often actual crimes means he is quoted as an authority.

Go read the magazine if you can stomach it. They simply don’t live in a middle class world. And they don’t care.